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Money Market Funds: The objective for this type of fund is to preserve capital while providing income based mainly on interest. The fund is invested in short-term money market instruments such as T-bills, commercial paper and short-term government bonds. It is suitable for investors looking for current income and liquidity of their money. The fund is subject to interest rate risk. Interest received is 100% taxable.
Mortgage Funds: The purpose of this type of fund is to provide regular income payment, as well as safety. The fund is typically invested in first mortgages on Canadian residential properties. Becasue mortgage payments are paid monthly while bond coupon is paid semi-annually, the mortgage fund is less volatile than bond funds. It will subject to interest rate risk. The distributions of the fund are in the form of interest and are 100% taxable.
Bond Funds: The objective for this type of fund is to provide investor with a regular steam of incom in combination with the safety of principal. It is primarily invested in good quality high-yield government and corporate bonds. Unlike individual bond, there is no fixed rate of interest or maturity date. The fund is subject to interest rate risk., and relatively low exposure to default risk. Interest income is its primary source of income, which is is 100% taxable.
Balanced Funds: The objective of Balanced fund is to provide a balanced mixture of safety, income and capital appreciation. It is realized by investing in a portfolio of fixed income securities and equity securities. The fund is subject to market and interest rate risk. The investor may receive a combination of interest income, dividend and capital gains.
Dividend Funds: The fund provides tax-advantage income (through dividend tax credit) with potential capital growth. It invests in prefered shares as well as high quality common shares which have a consistent dividend-paying history.
Equity Funds: The objective for equity fund is mainly for long-term growth. It invests mainly in the common shares of publicly traded companies. Like common stocks, the fund has a large degree of market risk and growth potential.
Real Estate Funds: The fund invests in income-producing real estate properties for long-term growth through caital appreciation and the reinvestment of income. The fund is less liquid than other types of funds, therefore subject to liquidity risk.
Index Funds: The objective of Index Fund is to match the preformance of the market as represented by a specific index.
Speciality Funds: The fund limits itself to investing in gold, real eatate, science and technology, and almost any other industries that you can imagine. These funds vary widely in value because they are not very well diversified due to its focus on one specific area.
Global Funds: The fund invests primarily outside of the country. Offer both diversification to your portfolio, and specific country risk.
